Oil Giants Reap Massive Profits as US-Iran Conflict Drives Up Global Oil Prices

Oil companies such as Exxon Mobil and Chevron have raked in massive profits due to the ongoing US-Iran conflict, which has impeded petroleum shipments and driven up global oil prices. The conflict, now in its sixth month, halted most shipping through the Strait of Hormuz, a narrow waterway that previously served as a delivery route for a fifth of the world's oil and natural gas.

As a result, Brent crude, the international standard, soared from about $70 to above $100 a barrel for much of March, April, and May, reaching an all-time high of $126. This surge in prices has led to huge profits for some of the biggest publicly traded oil companies, with Exxon Mobil doubling its second-quarter profits to $14.53 billion, up 105% from the same time last year.

Refineries, which turn crude oil into gasoline, diesel, jet fuel, and home heating oil, are also enjoying historically high 'crack spreads,' a term that describes the profits refineries expect to make based on the prices of oil and products. In late July, refineries planning to buy a barrel of oil for about $80 were looking at potential profits of $50-$60, compared to an average range of $20-$25.

Not all companies benefit equally from the conflict; some Middle Eastern companies are struggling to get their liquefied natural gas out of the Persian Gulf or have damaged oil fields and processing facilities. However, American refineries are running at near-full capacity and poised to benefit due to damage to refineries in the Middle East and Russia.